INVESTMENT COMPANY POLICY: Introduction

Joint Stock Company “National company” Kazakhstan Temir Joly “was organized in accordance with the Government of the Republic of Kazakhstan № 310 on March 15, 2007, № 479 of April 27, 2007 and № 1404 from December 28, 2007. The parent company was incorporated May 15, 2007, but capital and net assets have been made as of June 1, 2007, and accordingly, the operations have commenced on 1 June 2007. Capital was introduced on 1 June 2007 (hereinafter referred to as “date of”) by transferring the net assets of the RSE “Kazakhstan Temir Joly”, its subsidiaries and net assets of other public companies whose shares are also owned by the state. The purpose of this reorganization is to combine all state assets in the rail industry in one group. Accordingly, the present financial statements reflect the results of the Parent Company and fully controlled by its subsidiaries listed in paragraph 21 of the Notes. The parent company and its subsidiaries are hereinafter referred to as the “Group”.

State is the sole shareholder of the company. The Group operates the public railway system, providing services for freight and passenger traffic, and ensuring maintenance of railway infrastructure in the Republic of Kazakhstan. Average number of personnel for the period amounted to 119,334 persons. Address of registered office of the Group: Pr. Victory 98, Astana 473000, Kazakhstan. Bank-customer

The consolidated financial statements have been approved for release by the President and Director of the Department of Accounting March 14, 2008.

Group has a monopoly in the provision of freight and passenger rail transport in Kazakhstan, in this regard; the Panel’s proposals to raise tariffs for freight and passenger transportation are approved by the Agency of the Republic of Kazakhstan on Regulation of Natural Monopolies and Protection of the competition after testing and evaluation of various internal and external factors. By commodity orientation of the economy of Kazakhstan railway transport plays a key role in the transport complex of the Republic of Kazakhstan. According to the Republic of Kazakhstan Agency for Statistics in recent years, the turnover of all modes of transport, its share is more than 70% of passenger turnover of more than 50%.

In rail transport in the Republic of Kazakhstan JSC “NC” KTZ “is a monopoly and has no competitors.

The operational length of railways in Kazakhstan is more than 13.6 thousand km, including double-track lines -more than 5, 0 thousand km (37%), electrified lines – 3.7 thousand km (27%). Developed length of the main ways is 18, 8 thousand km, the station and the special ways – 6, 7 thousand km. The main part of the rail network “NC” KTZ ” (97, 5%) is located on the territory of Kazakhstan, and the remaining 2, 5% – in the border regions of Russia. The territory of northern and central regions of the country is 5,732 km of roads, which represented 42% of the total operational length of the paths in the possession of “NC” KTZ “. In the southern and eastern parts of the country are located 3,992 km of roads (29, 3%), Western – 3577 km (26, 2%), and in central and northern areas of 6075 km (44,5%) routes. Part of the railway network in the Republic of Kazakhstan is in the management of railway administrations of the Russian Federation and Kyrgyzstan.

At the railway network in the Republic are 751 separate points. 351 stations are cargo operations. 21 stations has an automated control system, 38 – are equipped with sorting devices (slides, semi slides and sloping hood), 6 are equipped with air-mail for freight forwarders and train documents.

The main indicators of technical equipment of railways (operating length, the length of electrified lines, and the working fleet of freight cars) and conveyances of (cargo handling, passenger, cargo weight) Kazakhstan ranked third among former Soviet republics, after Russia and Ukraine.

As of January 1, 2010 locomotives “NC” KTZ “1834 was a locomotive, of which 615 locomotives, 723 diesel locomotives and 496 shunting locomotives.

Operated by the Park (1233 locomotive) was 67% of the inventory of the park, respectively unexploited fleet of locomotives (601 engine) was 33% of the inventory of the park.

Currently, maintenance and repair of locomotives “NC” KTZ “are made on the repair enterprises of JSC Zheldorremmash, JSC Remlokomotiv, as well as small business entities of production cooperatives and limited liability partnerships.

To repair enterprises of JSC Zheldorremmash (Shu – Zhambyl Kazaly, Kusmuryn, Oral, Shalkar, Pavlodar, and Agadyr Atbasar) make repair of locomotives cycles of KR-2, RC-1, TO-8, TO-7 TO-6, TO-3.

To repair enterprises of JSC Remlokomotiv (Aktobe, Makati City, Astana, Karaganda, Kostanay, Protection, Ayagoz, Zhambyl, Arys, Sekseul) make repair cycles of KR-1, TO-8, TO-7 TO-6, TO-3 .

On the bases of production cooperatives and limited liability partnerships (Atyrau, Shubarev-Kuduk, Mangistau, Emba Kyzylorda Novoishimskoe, resort-Burabay, Yereimentau, Jean-Arka, Balkhash, Agadyr, Ekibastuz, Family, Ball, Aktogay, Almaty, Shu, Shymkent, Turkestan) repaired cycles TO-8, SO-7, SO-6, TO-3.

Current state of the inventory freight car fleet “NC” KTZ “is 76,934 units, including boxcars 13,246 units. Platforms – 10,236 units. Gondolas – 28,327 units. Tanks, – 10,392 units, other cars – 14,733 units.